In January 2019, China’s Ministry of Ecology and Environment (MEE) issued a draft Regulation on Environmental Risk Assessment, and Control of Chemical Substances (the Chemical Substances Regulation or CSR) in conjunction with 20 other ministries and agencies, including the Supreme People’s Court, the National Development and Reform Commission, and the Ministry of Commerce. MEE is seeking comment on the draft regulation through February 20, 2019, which is available in Chinese only.

This draft regulation is significant because it represents China’s first comprehensive regulation of environmental risks from chemical substances, similar to the Toxic Substances Control Act in the United States or the Registration, Evaluation, Authorization, and Restriction of Chemicals Regulation (REACH) in the European Union. In the past, China’s chemical regulations, such as Order 7 issued by the former Ministry of Environmental Protection (also known as China REACH), have been more narrowly focused on requiring the registration of “new chemical substances” and on the import and export of toxic chemicals. As discussed below, the draft CSR incorporates not only most of the existing chemical registration requirements under Order 7, but would also introduce additional requirements creating a broader new chemical regulation framework.

The CSR applies to all companies that manufacture, process, import, or export more than 100 kg of any chemical substance in China, and requires each covered company to report annually the types and quantities of such chemicals. In addition, the CSR establishes a risk-screening process for chemicals based on criteria including the chemical’s persistency, potential for accumulation in biological organisms, and significance of danger posed to the environment and to human health. The CSR provides for the State Council to publish a risk assessment plan under which certain chemicals will be identified for priority assessment, and subject to heightened reporting requirements including additional information regarding the toxicity, and other physical and chemical characteristics of the substance, the amount of the chemical substance discharged to the environment, and the conditions of the facility using the chemical. Environmental regulators are also authorized to require additional testing if they believe that the information provided is insufficient for purposes of the risk assessment.

Further, the CSR authorizes regulators to place chemicals on a “priority control” list based on the results of the risk assessment. The CSR provides that MEE will adopt one or more of the following measures to reduce the environmental risks of chemicals on the priority control list:

Regulating the chemicals as hazardous pollutants under the Atmospheric Pollution Law, the Water Pollution Law, the Ocean Environment Protection Law, or the Soil Pollution Law, as applicable

Requiring that solid waste containing such chemicals is disposed of through “harmless uses or treatment”

Requiring a new registration for any changes in the use of such chemicals

Restricting the uses of such chemicals, or limiting the maximum allowable concentration in products

The CSR also would require that information regarding chemicals placed on the priority control list must be publicized annually on an MEE-hosted website, in a form similar to material safety data sheets.

Finally, the CSR allows MEE to designate chemicals as restricted or banned. For restricted chemicals, only specified uses of the chemicals are allowed. No use of a banned chemical is permitted. Significantly, chemicals may be designated as banned during the new chemical registration process, which is an outcome not contemplated by the existing Order 7.

How proactively and restrictively MEE will employ its expanded authority over chemical regulation, and which types of chemicals will be the focus of their scrutiny remains to be seen. Latham & Watkins will continue to monitor and report on this development.

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